Senate debates sales tax on coin-operated devices; industry warns margins too thin to absorb levy

The Utah Senate took up Senate Bill 211 on Feb. 15, a measure that would lift existing exemptions and impose sales tax on a set of coin-operated devices, including amusement (video) machines, coin-operated laundromats and coin-operated car washes.

Sponsor Senator Lyle Hilliard told colleagues the bill has three discrete parts: a new tax on coin-operated amusement devices, and removal of current exemptions for coin-operated laundromats and car washes. He argued the measure promotes fairness with other taxed vending operations and said the Tax Review Committee had reviewed elements of the proposal.

Hilliard moved to reinstate language removing the exemption for coin-operated laundromats while accepting a friendly amendment from a colleague that would exempt coin-operated machines inside apartment complexes not open to the general public. That motion drew sustained opposition on equity grounds: several senators warned the proposal could be regressive, raising costs for low-income users and imposing a disproportionate burden on small proprietors who operate marginal laundromat businesses. “That’s a pretty regressive tax for some people who are not fortunate to earn as much money,” one senator said during debate.

A standing vote was called on the laundromat amendment; the presiding officer ordered senators to stand for counting when chair’s doubt was raised. Later in the floor sequence, Hilliard moved to remove the exemption for coin-operated car washes and argued those machines can more easily adjust timing and pricing than laundromats. That motion was also called and recorded in the transcript as carried by the body.

Lawmakers and floor members raised technical, operational and competitive concerns: machines often accept quarters only or use brass tokens sold off-site; token systems and quarter-only hardware make it difficult to collect incremental sales tax or pass the levy directly to users in cents or fractional percentages. Hilliard said the tax commission had indicated remedies to avoid tax pyramiding by exempting taxed supplies, but senators remained divided on whether the tax would be borne by proprietors or consumers.

Senator Bartle moved to hold the bill briefly so affected industry representatives could be heard; that motion initially failed but, after further discussion about prior interim hearings and fairness, the Senate approved a motion to hold and invited Traig Johnson of the Utah Amusement Music Association to speak for five minutes.

Traig Johnson testified that the coin-operated amusement industry operates on narrow profit margins — “somewhere between a 4 and a 7% profit margin” — and that machines and token systems make it practically impossible to levy a sales tax on the purchaser. “We cannot levy on the purchaser,” Johnson said, adding that operators have no practical way to pass a 6.25% tax onto consumers and that raising token prices historically reduced impulse play rather than increasing total receipts.

Senators questioned Johnson about token sales, pricing increments and market effects; Johnson said that while operators could in some large game-room settings sell tokens for amounts above a quarter, such token-sale systems are not practical for smaller outlets and impulse plays. After Q&A, the body dissolved the Committee of the Whole and proceeded with the bill’s floor actions.

The transcript records multiple amendment motions, standing counts and floor debates but does not show a final enrolled version in this excerpt; work on SB 211 continued on the Senate floor following the industry testimony and the standing votes recorded in the transcript.